If you are one among those AWS users wondering what the new AWS EC2 Convertible RIs offering class hype is all about, then look no further. Here we are today trying to make the utmost sense of why AWS rolled-out this feature?

In one of our previous blogs, AWS EC2 RIs are now AZ Agnostic, Convertible RIs are now a Reality, we’d provide the gist of what this new AWS feature brought to the table. Chiefly, this new announcement addresses one of the major stumbling blocks — the restricted flexibility with reservations — which ultimately boils down to wastage of RIs in turn making a hole in the pocket over a long term. With this new announcement, you can now be sure that there will be:

1) No wastage of RIs (even when your workload migrates to different instance family, however not applicable to all old reservations)

Read on how we have juxtaposed two scenarios, pre-launch and post- launch of the new Convertible RI class. This will help you better understand how the new feature will affect RI planning as well as cost savings.

Before Convertible RI offering classes existed:

There was only one class of EC2 reserved instances i.e. Standard. This class allows you to modify EC2 instance family, however, only within the same family. So, Standard EC2 RI classes are helpful only when you are sure of or able to predict your long-term requirements. If not sure, then it’s a catch 22 where you either compromise on performance or the cost.

Here’s why: Each reservation of instance irrespective of class is tied to a particular instance type family (like C3), a reservation plan (all upfront, partial upfront, no upfront), operating system (Linux, Windows, etc.), and tenancy (like shared). Over time, as the workload changes, you need to make changes to the type of instances.

To illustrate:

Consider you have purchased instances under Standard EC2 RI classes. You can modify EC2 Reserved instances, however, only within the same family. Moreover, you can modify an EC2-VPC instance reserved for 36 months either opting for Split or Merge option, but applicable in the same region.

Illustration: 2T2.Medium -us-east-1a ===> T2.Large-us-east-1a

So when your need for compute intensive machines scales up, inevitably you have to pay extra to reserve more instances of higher capacity. Plus, you cannot take advantage of the new generation of EC2 instances. This ultimately coerces you to allow reservations to go unused that eventually snowballs to a bill shock! (To optimize Standard EC2 RIs, read a Botmetric blog post here.)

After the availability of Convertible RI offering class:

You can now change the instance family and other parameters associated with RIs at any time to better suit your workload requirements. For instance, you can exchange C3 RIs to C4 RIs to take advantage of a newer instance type. Or if your application turns out to need more memory, you can convert C4 RIs to M4 RIs.

To suit your workload requirements, you can exchange RIs irrespective of various parameters. Like c4 can be exchanged for m4, shared machines can be converted to dedicated, or a Windows machine can be exchanged to Linux, and so forth — but with various cost factors implied. If you bought new convertible RIs while also use Standard RIs and want to exchange them, then the exchange will take the pro rata amount into account during the time of the purchase.

For instance: A three year Convertible reservation that cost $150* at time of purchase will have $100* in value at the end of the first year and $50* of value at the end of the third year. However, if you exchange it to a higher machine, there will be extra cost associated with it. [*Note that these are illustrative figures. The figures depends on AWS Pricing and policy]

Ultimately, Convertible RIs gives you that plasticity to change which instance that the RI can cover, with a trade off of a slightly lower savings rate over a period of time. However, it is important to note that AWS EC2 Convertible RIs cannot be exchanged across Regions.

How to go about it?

1) Go to Purchase Reserved Instance from your AWS Console.

2) Check the right-hand side box, ‘Only show offerings that reserve capacity.’

3) Select Convertible from the drop down menu under Offering Class type.

The 36 months term cannot be changed, i.e. they ‘must’ be purchased for a three year term

For example, if your RI costs $100*, at any time, you can convert it to another RI that costs exactly or at least $100. If the cost is higher, then you “true up” the costs at the time of exchange. [*Note that these are illustrative figures.]

The decision to buy or not to buy AWS EC2 Convertible RIs requires some strategy in place. For the reason that: you will have to factor in the expenditure required for the new three-year reservation and other RI attributes. Nonetheless, if you have full-blown budget to support a three-year purchase, know for sure that your instance usage or reservation needs will change, and need more flexibility, then we recommend you to consider the AWS EC2 Convertible RIs.

Are you planning to purchase the new Convertible RIs, or have a query to ask on how to go about it? We have your back. Get in touch with us on Twitter, Facebook or LinkedIn. In the coming blog posts, we will also cover about the new Region Benefit announcement. So stay tuned with us for all the updates from us.